Correlation Between Lifeway Foods and NH HOTEL
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and NH HOTEL at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lifeway Foods and NH HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and NH HOTEL GROUP, you can compare the effects of market volatilities on Lifeway Foods and NH HOTEL and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lifeway Foods with a short position of NH HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and NH HOTEL.
Diversification Opportunities for Lifeway Foods and NH HOTEL
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lifeway and NH5 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and NH HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH HOTEL GROUP and Lifeway Foods is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lifeway Foods are associated (or correlated) with NH HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH HOTEL GROUP has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and NH HOTEL go up and down completely randomly.
Pair Corralation between Lifeway Foods and NH HOTEL
Assuming the 90 days horizon Lifeway Foods is expected to under-perform the NH HOTEL. In addition to that, Lifeway Foods is 1.95 times more volatile than NH HOTEL GROUP. It trades about -0.01 of its total potential returns per unit of risk. NH HOTEL GROUP is currently generating about 0.01 per unit of volatility. If you would invest 413.00 in NH HOTEL GROUP on September 1, 2024 and sell it today you would lose (2.00) from holding NH HOTEL GROUP or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. NH HOTEL GROUP
Performance |
| Timeline |
| Lifeway Foods |
| NH HOTEL GROUP |
Lifeway Foods and NH HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and NH HOTEL
The main advantage of trading using opposite Lifeway Foods and NH HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, NH HOTEL can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NH HOTEL will offset losses from the drop in NH HOTEL's long position.| Lifeway Foods vs. ScanSource | Lifeway Foods vs. Waste Management | Lifeway Foods vs. Brockhaus Capital Management | Lifeway Foods vs. Consolidated Communications Holdings |
| NH HOTEL vs. SIVERS SEMICONDUCTORS AB | NH HOTEL vs. Darden Restaurants | NH HOTEL vs. Reliance Steel Aluminum | NH HOTEL vs. Q2M Managementberatung AG |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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